"The appeal of justice and liberty, in the end, is greater than the appeal of hatred and tyranny in any form. " President Bush, July 12, 2004

Terrorism remains a global threat from which no nation is immune. Despite ongoing improvements in US homeland security, military campaigns against insurgents and terrorists in Iraq and Afghanistan, and deepening counterterrorism cooperation among the nations of the world, international terrorism continued to pose a significant threat to the United States and its partners in 2004. The slaughter of hundreds of innocents in the Beslan school, in the commuter trains of Madrid, on a Philippines ferry, and in a Sinai resort proved again that the struggle against terrorism is far from over. Over the long run, the spread of democracy and economic and social reform, sustained and encouraged by the United States and others, should promote political, economic and social conditions inhospitable to terrorist exploitation. For now, however, the tasks confronting the United States and its partners in the struggle against terrorism remain formidable.

A look back on the events of 2004 in the global war on terrorism reveals the following:

Casualties

There were no terrorist attacks in the US homeland.

Many other countries were hit by terrorist attacks; the most deadly, like Beslan, Madrid, and the Philippines ferry, were committed by local groups, many inspired by or linked to al-Qa'ida.

American deaths due to terrorist attacks were confined to Iraq, Saudi Arabia, Afghanistan, Egypt and Gaza.

The overwhelming majority of victims of terrorist attacks were citizens of countries other than the United States. Many victims were Muslims.

The al-Qa'ida Threat

The primary terrorist threat to the United States in 2004 continued to be al-Qa'ida, which remained intent on attacking the US homeland as well as US interests abroad.

The United States and its partners, however, degraded al-Qa'ida and its affiliates' leadership abilities and depleted the ranks of their operatives.

Al-Qa'ida, weakened operationally, adapted by spreading its ideology to local groups throughout the world. Al-Qa'ida-affiliated groups and locally-based extremists continued to be inspired or assisted by Usama bin Ladin and other al-Qa'ida leaders.

International Cooperation

The diffusion of the al-Qa'ida ideology in many countries makes even more crucial the need for deeper international cooperation to defeat emerging violent extremist groups.

The United States and other donor nations must intensify current efforts to bolster the political will and the intelligence, law enforcement, financial and military capabilities of partner nations to combat terrorism, on their own or with us.

The United States and its partners must work together to prevent the spread of al-Qa'ida ideology and the growth of jihadist terror. The United States and its partners must also continue efforts to defeat non-al-Qa'ida terrorist groups, discourage state sponsorship of terrorism, and prevent terrorist access to weapons of mass destruction (WMD).

The Evolving Terrorist Threat

Al-Qa'ida leadership was degraded through arrests and ongoing Pakistani operations to assert greater control along the border with Afghanistan where some al-Qa'ida leaders are believed to hide. Numerous al-Qa'ida and affiliated foot soldiers were captured or killed during the year.

Saudi security forces killed several top leaders of the al-Qa'ida organization in Saudi Arabia, including Khalid Ali al-Hajj and Abdulaziz al-Muqrin.

Abu Bakar Ba'asyir, leader of the al-Qa'ida-affiliated Jemaah Islamiya remained in jail pending his early 2005 trial for involvement in the 2002 Bali bombings.

The Filipino Antiterrorism Task Force captured seven foreigners in 2004 believed to be elements of al-Qa'ida and Jemaah Islamiya.

British authorities in August 2004 arrested suspected al-Qa'ida-affiliated individuals who were subsequently indicted in the United States for plotting to attack financial institutions in the United States.

Many senior al-Qa'ida leaders remained at large, continued to plan attacks against the United States, US interests, and US partners, and sought to foment attacks by inspiring new groups of Sunni Muslim extremists to undertake violent acts in the name of jihad. In some cases, al-Qa'ida attempted to bring other extremist groups under its banner, while in other cases, groups claimed allegiance to al-Qa'ida despite little evidence of any connection with al-Qa'ida leaders. In still other cases, the existence of new groups only became evident following an attack.

Al-Qa'ida cells continued to carry out attacks in Saudi Arabia throughout 2004.

Al-Qa'ida-affiliate Jemaah Islamiya continued to plot attacks against the United States, Australian and other foreign interests in Indonesia, bombing the Australian Embassy in September 2004.

The al-Qa'ida cell in East Africa, including terrorists linked to the 1998 bombings of US Embassies in Nairobi and Dar es Salaam and the 2002 attacks on a Mombasa hotel and an Israeli commercial aircraft, remained at large, and are suspected of planning new attacks.

Notorious terrorist Abu Musab al-Zarqawi pledged the fealty of himself and his group in Iraq to bin Ladin; al-Zarqawi is now the recognized leader of al-Qa'ida in Iraq.

The March 2004 bombing of commuter trains in Madrid that killed 191 innocent people was executed by a previously unknown group of jihadist terrorists (mostly Moroccan immigrants resident in Spain for years) inspired by, but without direction from, al-Qa'ida.

The new leader of the GSPC in Algeria announced his affiliation with al-Qa'ida, but there was no evidence of assistance or direction from al-Qa'ida leadership.

The latter two incidents illustrate what many analysts believe is a new phase of the global war on terrorism, one in which local groups inspired by al-Qa'ida organize and carry out attacks with little or no support or direction from al-Qa'ida itself.

As al-Qa'ida itself weakens and local groups take on greater responsibility for planning, acquiring resources and carrying out attacks in their localities, it will be ever more important for the United States to help partners who require assistance to counter this new manifestation of the terrorist threat. Furthermore, although al-Qa'ida remains the primary concern regarding possible WMD threats, the number of groups expressing an interest in such materials is increasing, and WMD technology and know-how is proliferating within the jihadist community.

International Cooperation

International cooperation is an integral and growing aspect of the overall US "National Strategy for Combating Terrorism" which calls for:

Defeating terrorist organizations by eliminating their sanctuaries, leadership, finances, and command, control and communications capabilities;

Denying further sponsorship, support, and sanctuary to terrorists by cooperating with other states to take action against those who provide support;

Diminishing the underlying conditions that terrorists seek to exploit by enlisting the international community to focus our mutual efforts and resources on addressing legitimate political and social needs and by reducing security vulnerabilities in the countries most at risk; and

Defending the United States, its citizens, and interests at home and abroad.

The continuing threats by al-Qa'ida make necessary the continued investment of enormous effort and resources by the Department of Homeland Security, the FBI, Department of Justice, Department of State, and Department of Defense (among other federal agencies), as well as state and local governments, in new and strengthened homeland defense measures. They also require a growing level of international cooperation between the United States and its many partner nations around the world to interdict terrorists, disrupt their planning, restrict their travel, reduce the flow of financial and material support to terrorist groups, and enable partner governments to assert control over weakly governed territory where terrorists find sanctuary.

In 2004, the United States broadened and deepened its international cooperation on counterterrorism issues. Increased diplomatic, intelligence, law enforcement, military and financial cooperation contributed directly to homeland security and the interdiction or disruption of terrorists around the globe. Examples are discussed throughout this report, but the following successes stand out for 2004:

Close cooperation with British, French, and other authorities - coordinated through the State Department and US Embassies in London, Paris and else where - was pivotal to managing threats to airline security during the 2003-2004 New Year period.

Information-sharing with the United Kingdom and Pakistan led to the disclosure and disruption of al-Qa'ida attack planning against US financial institutions.

US diplomatic and military assistance facilitated cooperation among Algeria, Mali, Mauritania, Niger, Libya and Chad that led to the capture and return of wanted GSPC factional leader al-Para to Algeria to stand trial.

Working with a broad spectrum of domestic and international partners, the United States has identified and disrupted many sources of terrorist finance.

The United States used its G8 presidency in 2004 to advance new international transportation security measures and to coordinate international counterterrorism assistance among G8 and other donors, ensuring that counterterrorism needs of states requiring assistance were addressed and wasteful duplication avoided.

Notably, 2004 was marked by progress in decreasing the threat from states that sponsor terrorism. Iraq's designation as a state sponsor of terrorism was formally rescinded in October 2004. Libya and Sudan took significant steps to cooperate in the global war on terrorism. Unfortunately, Cuba, North Korea, Syria, and, in particular, Iran continue to embrace terrorism as an instrument of policy. Most worrisome is that these countries also have the capabilities to manufacture weapons of mass destruction and other destabilizing technologies that could fall into the hands of terrorists. Iran and Syria are of special concern for their direct, open, and prominent role in supporting Hizballah and Palestinian terrorist groups, for their unhelpful actions in Iraq, and Iran's unwillingness to bring to justice senior al-Qa'ida members it detained in 2003.

American noncombatants in Iraq and Afghanistan comprised most of the American victims of terrorism this year. These casualties occured against a backdrop of US combat operations against terrorists and insurgents in both countries. Americans were also killed in terrorist incidents in Saudi Arabia, Egypt and Gaza. official presence overseas and to step up travel adviso

The United States continued in 2004 to harden security of its official presence overseas and to step up travel advisories and warnings to American citizens to help them manage and weigh the risks associated with travel into areas in which terrorist threats may be elevated. The United States also continued to work with international and multilateral organizations to tighten security of seaports and airports and improve security of international travel.

The United States will continue to broaden and deepen international cooperation to protect US citizens. The trend away from centralized planning of terrorist activities and towards inspiration of local groups to commit acts of terror makes even more crucial the need for deeper international cooperation to defeat emerging violent extremist groups. The United States and its partners must intensify current efforts to bolster the political will and the intelligence, law enforcement, financial, and military capabilities of partner nations to combat terrorism, on their own or with us. The United States will step up cooperation with its partners to prevent the spread of al-Qa'ida ideology and the growth of jihadist terror. The United States will also continue its efforts to defeat non-al-Qa'ida terrorist groups, discourage state sponsorship of terrorism, and mobilize international will and build capacity to prevent terrorist access to WMD. No single country can successfully deal with terrorism on its own, but together we will prevail.